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Nimi Kular and her three sisters loved their mom’s Indian home cooking. But when they asked for recipes, she’d tell them to add a pinch of this spice and a dab of that.

“Like most moms and grandmothers, she just threw things together,” says Ms. Kular, a co-founder of Jaswant’s Kitchen. “We could never get anything written down.”

To help her daughters learn about Indian cooking, their mother, Jaswant Kular, began to mix up spice blends. “She knew if she didn’t make it easy, it would be lost to our generation,” admits Nimi Kular. The resulting mixes became wildly popular not only with her daughters, but with friends and relatives. And the family began to think about marketing them.

“None of us had a background in the food business,” says Ms. Kular. “It was really a passion project.” The women rented a commercial kitchen in a friend’s banquet hall when it wasn’t in use. Together they’d roast, grind and blend the spices and package them for sale at local food shows and farmer’s markets.

But as their business expanded, they faced a new set of problems. They needed more, and readily available, space to work in, as well as specialized equipment that would have to be stored. What’s more, they were plunging into unknown territory and sorely in need of advice from food industry veterans.

That’s when Ms. Kular came across a website for Food Starter, a not-for-profit accelerator for food startups launched last November, and one of the City of Toronto’s many initiatives meant to nurture home-grown manufacturing and food processing in the city.

The Kulars took over a small unit in the 20,000-square-foot building at a reasonable price per square foot. “It’s our own little space where we have our own equipment,” says Ms. Kular. “And we’re able to use some of the equipment that they have in the shared space – things like the huge industrial ovens we use to roast the spices. We’d never be able to afford them on our own.”

Jaswant Kular, centre, with her daughters Nimi, left, and Simran at the industrial kitchen that’s home to their spice company, Jaswant’s Kitchen. (Photo by Jennifer Roberts for The Globe and Mail)

Even better, other businesses on the premises can offer advice on food safety, production, marketing and accounting. When the Kulars were seeking a distributor, for example, other Food Starter businesses arranged introductions and offered insight.

Jaswant’s Kitchen is one of many small manufacturing companies setting up shop in Toronto, thanks to the city’s concerted effort to replace old-style large industrial manufacturers with smaller, more entrepreneurial ventures. Rather than focusing on low-cost production of commodity goods, these companies often create unique, custom products in the area of technology, hardware, fashion and food.

Food Starter works daily with dozens of such companies and many more are members, says executive director Dana McCauley. She believes the strength of Toronto’s future economy depends on developing such home-grown success stories. “Those companies will not necessarily be as tempted to move to the U.S. when they’re offered all kinds of tax incentives,” she says.

Indeed, while it may seem like madness to try to encourage manufacturing and processing in the heart of the city, it makes good sense, says Chris Rickett, manager of entrepreneurship services for Toronto.

“Manufacturing is still one of the largest employers in the city,” he says. It employed more than 130,000 Torontonians in 2015, according to Statistics Canada.

More manufacturers at work

The number of manufacturing firms has increased in recent years. “We attribute the growth to a lot more micro-manufacturing, as well as the ‘maker movement’” of independent inventors, designers and tinkerers, as well as tech hardware companies, says Mr. Rickett.

“Part of making sure manufacturing continues to exist is making sure that people know it is this very creative job opportunity. It needs rebranding, and the maker movement is really good at that.”

What’s more, he says, new tech tools are making it a lot easier to open a manufacturing business.

(Photo by Jennifer Roberts for The Globe and Mail)

“It used to be if you wanted to make a product, the process of prototyping that and getting it to market was very long,” he explains. “Now you can prototype it down at the library, using their MakerBot [3-D printer], then put that prototype on Kickstarter and presell the product.”

The upshot is that the timelines and barriers to starting a manufacturing company have been drastically reduced.

That doesn’t mean, however, that opening a manufacturing or processing business in the city is easy. Space is at a premium, and labour costs are high compared with overseas locations such as India, China and Vietnam. Advice can be difficult to come by as well.

“We brought together a lot of early stage manufacturers as well as postsecondary institutions and incubators in June to try to lay out their pain points,” says Mr. Rickett. “Now we’re working with them to develop some solutions. That’s a big priority for the city over the next 12 months.”

Room to grow

One of the major barriers is finding production space in the city, he says. Although there’s plenty of prototyping space, “we find that piece of going to the next level of starting some small-run production is missing,” says Mr. Rickett. “As is getting access to mentors and training and advisory support on, say, developing supply chains, raising funding and marketing.”

The city hopes to at least partially fill the gap with a new dedicated manufacturing accelerator to be built in a residential condo building at Dufferin Street near College. It will operate similarly to Food Starter, offering shared equipment and services, mentorship and support to fledgling manufacturers.

The project came about when builder Siteline Group Inc. applied to demolish 60,000 square feet of employment space at the Dufferin site several years ago to put up two residential towers. The city balked. “We don’t want to lose manufacturing space, especially in the core,” Mr Rickett says. “We try to staunchly defend every square foot of employment space in the city.”

So the city proposed a novel solution: If the developer were to replace every foot of that employment space in one of the condo towers, the project could go ahead. The builder agreed, and the project was approved in June.

Manufacturing and residential

The building is still “a few years off,” says Mr. Rickett. “But it will be the first time you’ll actually see manufacturing in a residential building. It will be very unique to Toronto.”

Mitch Debora, a co-founder and chief executive officer of Mosaic Manufacturing, says that having access to such a space would have helped him immensely in getting his business off the ground.

(Photo by Jennifer Roberts for The Globe and Mail)

The germ of his business came from his experience running a small 3-D printing company to make some extra cash while at Queen’s University. Inevitably, Mr. Debora received requests to print items in several colours and materials. “Believe it or not, that was just not possible,” he says. “About 97 per cent of 3-D printers are limited to printing something in one colour or material.”

Mr. Debora and his three co-founders smelled an opportunity and founded Mosaic Manufacturing. “Our sole purpose is to expand the range of things people can make on a 3-D printer,” he says. Their first product, the Palette, converts low-cost 3-D printers from single-colour to multicolour printers at a cost of $1,000.

A Kickstarter campaign to get the project off the ground raised $230,000, mainly from hobbyists, enthusiasts and artists – all of them willing to prepay for a product they wouldn’t receive for eight months or more.

“That was really, really huge in terms of demonstrating demand from the market,” says Mr. Debora. “Then we had to decide where to build this company.”

Big-city pluses

Toronto won out, largely because it would give them access to angel investors and venture capital firms, as well as plenty of talent. “There’s a really strong business and engineering talent pool in the city, which has helped us form a really strong core team,” says Mr. Debora.

Mosaic wanted to manufacture its first 1,000 units in the city as well. “We didn’t want to make the mistake of going overseas, running into a million problems and then folding because the quality of our product was low,” says Mr. Debora. “Even though it’s more expensive to produce them here, it means that there’s no language barrier and little problems can be dealt with in a matter of hours, rather than weeks.”

But finding space wasn’t easy. “We started by creating a document with all our requirements in terms of space, budget, locations, elevators, ventilation and so on,” he says. “We passed that around to a couple of realtors.” They looked at 10 to 15 properties over two months.

In the end, they chose an office building at Church Street and Richmond. “We don’t do heavy manufacturing there, just assembly, quality control and shipping,” says Mr. Debora. The other occupants include law firms and recruitment offices, so there’s no one to bounce ideas off of or consult regarding manufacturing-related issues.

Eventually, though, once the bugs are worked out, Mr. Debora expects to manufacture offshore. “The way products are manufactured now, it makes so much sense to have them produced in countries where labour is cheap – like China,” he says.

A new kind of manufacturing

Certainly urban manufacturers in Toronto can’t compete with offshore locations in terms of labour cost. That’s why many of the city’s new manufacturers are small-scale operations focused on limited run, high-quality specialty items, says Tony Mammoliti, owner of YNOT.

Mr. Mammoliti started his company with a single product – a Velcro pedal strap for cyclists. “Taking the product overseas wasn’t an option,” he says. “My order runs were very small.” Neither did the equipment and expertise he needed exist in Toronto, “so I had to start my own little urban manufacturing business.”

In 2010, Mr. Mammoliti cleared out a space in a friend’s garage, bought a used sewing machine on Craigslist and started production. His product line has since expanded to include bags, tool rolls and other bike accessories that are sold around the world.

And while he originally manufactured in the city out of necessity, what keeps him here, he says, is a focus on quality. “I’ve done some designing for other companies that then send the prototype to China,” says Mr. Mammoliti. “The difference between what I send and what they get back is extreme.”

His own products are all made in an 8,000-square-foot facility. And while they cost a little more, they last longer. “Our school bag starts at $100,” says Mr. Mammoliti. “That may seem expensive, but if you buy it for your kid they’re going to be able to use it all through high school and probably through university.”

Speedier than offshore

Another advantage of manufacturing at home: speed. “I can design something and have it out in a week,” he says. “And I can simplify designs on the run to make them more cost-effective, and carry less inventory.”

Still, he admits, it’s not easy to make urban manufacturing work. YNOT uses lasers for swift, accurate cutting and has developed its own software to make ordering and manufacturing more efficient. “But if I was trying to manufacture someone else’s bags the margin just wouldn’t exist,” says Mr. Mammoliti. “We had to build our own brand to make it affordable for us to sell our goods.”

Nonetheless, he says, new online tools have had a tremendously beneficial effect on the city’s small manufacturers.

YNOT has raised about $200,000 through Kickstarter campaigns in the past three years, and the platform gives the company a bigger-than-usual purchase order with higher margins, since the sale is direct to the consumer. “I think that has helped urban manufacturers,” says Mr. Mammoliti.

In addition, tools like Etsy (a global online marketplace) and Shopify (build your own online store) make it easy to find a market for products online.

Mr. Debora speculates that in two to 10 years, labour costs may not even be a consideration because 3-D printers may be able to do the manufacturing. “We can already 3-D print a flashlight and then pop the batteries in and it works,” he says. “I think we’re going to see some really disruptive technology in the manufacturing space.”

The ultimate irony: That would effectively eliminate many of the high-value jobs the city has been working so hard to save.

Innovations elsewhere

Toronto isn’t the only city seeking to harness the power of micro-manufacturing to generate jobs and revenue. Here’s a sampling of what’s going on in other cities, as well as Toronto.

Catalyst137: This gargantuan, 475,000-square-foot innovation complex in Kitchener-Waterloo, Ont., is set to open next summer. While the region attracts more than its share of tech startups, Catalyst137 targets hardware development firms, offering rental units from 2,600 square feet to 60,000 square feet, as well as a shared manufacturing space, a testing facility and commercialization services. If all goes according to plan, it will be larger than HAX, a hardware accelerator with locations in Shenzhen, China, and San Francisco.

Made in Montreal: A non-profit website aimed at promoting and supporting local manufacturing and “buying local” in the city. Projects include meet-up events, research and advocacy, and a Web series that showcases manufacturers, from clothing designers to hat-makers to mosaic creators.

Built in Montreal: An online directory of resources, events and jobs.

Toronto Made: Created by Derek Brunelle, this non-profit website offers a directory of local manufacturers and business resources.

Startup Here Toronto: A directory of business support for entrepreneurs that includes pre-incubation programs, incubators, accelerators and co-working spaces.

Apparel Innovation Centre: This Calgary centre provides businesses with services to test, design and manufacture innovative apparel. The state-of-the-art facility has the only full-scale thermal comfort testing chamber in North America, and the only full-scale hot fluid and steam protection testing chambers in the world.

Maritime Makers: In co-operation with city government and local agencies, Maritime Makers has successfully piloted more than 100 events including their city’s Etsy Made in Canada, Nova Scotia’s largest one-day selling event for creative entrepreneurs.

Correction: A previous version said the Apparel Innovation Centre was planning to open in Jan 2017. In fact it is already open.